In today’s rapidly evolving global energy landscape, with a heightened focus on combating climate change and a drive towards energy independence, the significance of alternative energy sources has never been greater. In this context, Azerbaijan’s substantial potential in solar and wind energy stands out. The country’s economically viable and technically feasible renewable energy sources are estimated to have a capacity of 26,940 megawatts, comprising 3,000 megawatts from wind, 23,040 megawatts from solar, 380 megawatts from bioenergy, and 520 megawatts from small hydropower resources. By 2030, Azerbaijan aims to increase the share of renewable sources to 30% of its total energy production.
To fully harness this potential, attracting international investment and creating stable financial channels are essential steps that will not only foster economic growth but also strengthen the country’s energy independence and environmental resilience. According to recent UN data, developing countries need investments between $500 billion and $1 trillion annually to reduce carbon emissions and transition to sustainable energy. Therefore, the upcoming 29th session of the UN Climate Change Conference of the Parties (COP29) could serve as a decisive platform to achieve these goals. Notably, this event aims to unite efforts to support alternative energy, stimulate partnerships, and advance energy security on a regional scale. These initiatives are already benefiting Azerbaijan’s standing in global rankings, as evidenced by its climb to 32nd among 120 countries in the World Economic Forum’s Energy Transition Index, thanks to improved regulatory frameworks and infrastructure.
Beyond this, COP29 will provide a critical venue for discussing global climate policy, where participating nations will consider measures to mitigate climate change and accelerate the energy transition. For Azerbaijan, showcasing its renewable energy potential at such a prestigious event presents a unique opportunity to attract international investment. Government incentives, improved conditions for investors, and partnerships with international financial institutions will play a pivotal role in this process.
COP29 is frequently referred to as the “Financial COP” because it aims to establish a new global goal for climate finance. In addition to the existing commitment by developed countries to provide $100 billion annually for developing nations, discussions will focus on creating the Climate Finance Action Fund (CFAF) to address current gaps in climate funding. This step will ensure a steady flow of investment to countries like Azerbaijan, supporting their transition to clean energy.
To attract financing and promote a green economy, Azerbaijan is also exploring the issuance of green bonds. In 2023, the global green bond market exceeded $2 trillion, underscoring investors’ strong interest in environmental projects. Utilizing such financial instruments in Azerbaijan will not only increase the economic return from raised funds but also lay the groundwork for job creation within the country. It is forecasted that the development of green energy could generate up to 10,000 new jobs by 2030, positively impacting employment and socio-economic development in the regions.
One of Azerbaijan’s strategic goals in the post-oil era is the development of green energy for export, and agreements have already been signed with companies such as Masdar (UAE) and BP (UK) for projects of 230 megawatts each, with plans to go online by 2025. Additional agreements have been concluded with ACWA Power (Saudi Arabia), Fortescue Future Industries (Australia), TEPSCO (Japan), Maire Tecnimont (Italy), China Gezhouba Group Overseas Investment (China), Total Energies (France), and others. These projects receive support from international financial institutions, including the World Bank, the European Bank for Reconstruction and Development, and the Asian Development Bank, which accelerates the process of attracting investors for laying cable lines and establishing sustainable export channels to deliver electricity to Europe.
In this way, Azerbaijan’s significant potential in renewable energy, coupled with international investment and expanded financial channels through COP29, can play a key role in advancing the country’s energy sector. These steps will not only stimulate economic development and bolster Azerbaijan’s energy independence but also strengthen its position on the international energy stage, ensuring environmental sustainability and energy security in the region.
